The story is in German, and it’s also behind a pay wall. Eurointelligence has a nice Email report.

Spiegel magazine has an absolutely shocking account of a cartel between the five motor companies – VW, Daimler, BMM, Porsche, and Audi. The original article is worse than any summary we have read because of the many details the two authors have dug up in a large investigation. Coming on top of the diesel emissions scandal, the reputation of the German car industry has been reduced to that of a criminal organization. Unlike the authors, we are less worried about the fines, which will be large, than about the long-term commercial impact.

This is one of the largest cartel cases in German history. The meetings started in the 1990s. The car makers created 60 working groups, each specializing on a different part of the car. For example, they agreed on the maximum speed at which a sunroof opens or closes while the car is in motion, or the maximum size of the tank for the AdBlue chemical which reduces certain toxic emissions. There were working groups for brake systems, for seats, for suspension, for clutches, and naturally also for diesel and petrol engines.

The working groups met several times a year in the cities where the car companies have their HQ’s, like Munich, Stuttgart, or Wolfsburg; as well as during the large European motor shows in Frankfurt, Geneva, and Paris. They also held teleconferences in between meetings. They were quite cocky. An Audi email reads:

“Hello everybody, please find attached the date for the ‘secret’ meeting in Munich.”

The authors, two of Germany’s most renowned business journalists, said the cooperation has gone so far that these companies can no longer be regarded as in competition with one another but as a single Deut­sche Au­to­mo­bil AG.

All the companies, except BMW, have admitted the meetings when questioned by the EU Commission and the Federal Cartel Office.

When industries decline, this type of behavior is very common in the penultimate phase. The industry profits are still high. The companies are still benefitting enormously from past inventions and product developments. As we now know, the German car industry was able to maintain their predominance beyond the natural sell-by date through a cartel. They are approximately at the same stage where Detroit was just before 1967.

The problem with the German car industry specifically is that they bet the house on diesel technology, and used their influence on the German government to prevent more stringent testing of emissions. The function of the cartel was to maintain profit margins, and in particular to secure the predominance of the diesel technology.

The German public had an extraordinary degree of trust in the industry, partly also because German auto journalists failed to do their job since they were part of the cartel.

The next ten years will see two significant developments, for which the German car industry is not prepared: one is the gradual switch towards hybrid and electrical engines, and the other is the advent of artificial intelligence. The German car industry has a lot of patents for electric engines, but they are globally not the leading force. And now their reputation is tarnished.
We don’t expect rapid falls in sales immediately but see an unrecoverable loss of reputation in the long-term because we are confident to predict that the industry will not clean up the mess it has created. Rather, it will seek a cover-up or direct protection from the government. The tendency will be to sit this out, and the government will avoid an open confrontation given the many jobs that depend on that industry. This may delay the onset of a crisis for a while, but will ultimately accelerate it.

Merkel to the Rescue?

Massive fines are on the way but Merkel will do whatever she can to reduce the fines and the impact.

The amazing thing to me is how long these corporations got away with this.

Trust is lost and diesel is toast. The latter was true even without this latest scandal.

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Nothing will happen. They are all in bed together, State and Industry.

“The European Commission and the Bundeskartellamt (German cartel office) have received information on this matter, which is currently being assessed by the commission. It is premature to speculate further.”

I fail to see, as a former antitrust lawyer, what is wrong with companies “colluding” in the development of technology. If they were colluding to suppress technology, that would be a violation….Is Merkel all out to destroy Germany?

i suspect this is the way that germans act in all industries.
we know that quality standards are “ensured” via restrictive labor market practices and the trade unions (why aren’t trade unions being accused of being a cartel?).
This behavior no doubt is replicated in the drug, banking, chemical and engineering industries in general.
No doubt also, that gemrans will claim that trade conventions do the same thing elsewhere.
Lastly, the politicians and regulators are part of this cartel like behavior too. So are the auditors. It is the way that germans think.

this is simple technical coordination nothing really nefarious about this.

Plenty of US companies coordinate with their competitors on technical specificifaction stuff. For example, API ( American Petroleum Institute ) had hundreds of sub-sub committees that coordinate minutiae of specifications for all matter of the supply chain.

I would add it works with same mind for Japan corporations, where you see easily that price competetition is higly limited on many products, probably cars too.
Nothing new about the elite and politicians deciding for higher margins.
If you know it, fight it by not accepting to buy new, criticize the makers and buy elsewhere when necessary.

Diesel is not needed in trucks, either. Natural gas runs much, much cleaner, engines last much, much longer, and it is less expensive as well, depending on oil prices. If oil ever gets back to $60, expect to see this technology be more widely adopted.

Heavy Nat Gas usage during summer driving season, when Nat Gas needs to be pulled at a surplus to fill storage to about 3T for winter heating. I could see a wee bit of a problem with this come a cold winter.
Besides compressed or liquefied Nat Gas still scares the poop out of me. My diesel can’t go kablooey.

Cases of CNG vehicle explosions are very rare, and on those cases when they do happen, they almost always involve an expired tank. The biggest negative on CNG is that the tanks are only rated for 9-12 years, after which it becomes illegal to fill them, and they must be replaced, which is expensive.

Germany has very little natural gas (it is mostly imported from Russia).

Germany is geographically in the middle of Europe — any time there is a war (France/Napoleon, AustriaHungary vs France/England, etc) the combatants have to go through Germany to fight each other… and that doesn’t count the times when Germany starts the fighting.

Going to war with engines that burn fuel you get from your enemies is stupid — ergo Germany pushed diesel. No one believes this global warming fraud now, and Al Gore hadn’t even manufactured the lie until ~20 years ago (when the tax-and-spenders were warning about another ice age).

Europe goes to war often, and with the global economic power (USA) going bankrupt and unable to placate Europe…. the last thing anyone in Europe should worry about is global warming. You folks are going to war again in a few years, and you have Brussels to thank for it!!!

Because German industry is still generally functional, fairly efficient, competitive, and hence profitable. And ran by people who are still, at least partially, literate. While most of the rest of the West, is now ran by ambulance chasers, regulators and others who are utterly unable to create any value at all. Hence instead focus their meager little brains, on throwing ever more childish tantrums about how their betters are “baaaddd”, and gommiment should take what they create, and let the ambulance chasers and other utter expendables redistribute it instead.

Of course working groups are not “‘criminal,” for any reasonable definition of criminal. If you and I are both contractors with limited resources, and decide to submit a bid together for completing a particularly big contract, we are not “colluding.” If we try using our little deal to unreasonably drive up costs, the client can just go somewhere else. And car buyers can just buy a Toyota.

If a diesel engine emits more NOx than is considered appropriate, band that engine. The exact process by which it came to be, is utterly irrelevant.

But the know-nothings, produce-nothings, worth-nothings of the world, don’t get that. And never will, as their always over inflated sense of self worth, will lead them to always believe that the few simplistic, harebrained little things that their limited aptitude allows them to understand, should be anointed as important. Things like who said what, who talked to whom, what did he really mean when he said what, what did his body language say….. blah, blah.

IOW, just childish court intrigue. Simplistic and petty. Too dumb for literate people to even waste a second of their more valuable time on. But, and this is the important part: The only thing the dimwits will ever understand. As actually building a box, much less an engine of any sort, or in any other way creating anything of value at all, is so far beyond the scope of their lack-of-brains, that it may as well be magic. So, not understanding it, the best they can do is try to get government to “deem” it Black Magic.

I’ll go full tinfoil for fun.
Given the above reality has been obvious to many for quite a while, the smoothness of the market alone whispering ‘we are one’, you have to ask why ‘investigative precision’ raises the topic to ‘public consciousness’, why ‘a piddle in the punch’, also known as ‘leaking before the guests’ , has taken place.
Someone above suggested it was ‘the Russians’, but natural gas is much more a Brussels sprout or dare I say Murky reality, so I think that though there are grounds for collusion there, it would not be fair to single out Bad Vlad.
Let’s follow our noses . The agenda in EU does verily seem to be the same as it ever was, a progressive monopoly . The latest theme to startle its impatient subjects is migration to alternative energy supply. After all, if the middle east doesn’t calm down after several doses of imperial sedation, it is as likely to explode as never before; and anyway, the Saudis need their oil themselves, if not the Chinese… why not just go green.
So how do you transfer and outdate a potentially outdated national monopoly to its regional protectorate, and use the unacknowledged status the former has acquired to launch a new mandate that is ‘just and equitable, a common project representing the future of Europe’, where of course there will be plenty of high chairs for those that still dribble?
Yes, it is very juvenile of me to think like this, but when you look at the alternative examples of mature representation that surround us, I think criticism evaporates like a friendly breath laden with cognac… just don’t tell Little Maurice.

It’s what happens when the gubberment formulates unrealist rules on an industry. The technology is not there so you have to fake it. Combine that with gubberment’s tendencies to create crisises so that they have to manage them and ya git what ya got today. Health care debacle is the same method.

If Air is aspirated as the oxidizer in a Diesel, there will be NOXs produced because of the chemistry of combustion. Only by using O2 and not using Nitrogen containing Air could NOXs be avoided. The operating temperature of the Diesel engine in the cylinder is higher than the Otto engine hence more NOXs. But then the thermodynamic efficiency is higher in the Diesel engine. Few places on earth really need to cut back on NOXs; places like Los Angeles come to mind as they are natural regions for smog to form from NOXs. Most places on earth do not trap the NOXs.

Reputation is way over rated. If the German car looks nicer, performs better and is competitively priced, it will sell. Nobody is going to put $ 40,000 in a dud because the other one has a bad reputation. The biggest problem they face is; can they be competitive whilst sticking to the law? Can they really build an engine or are they going to face a 15% deficit in horsepower to the competition when respecting the law.

I have a neighbor who sells Mercedes. Even he admits they’re overpriced. Most pay for the status. This won’t tarnish their image since it has no effect on their product outside of maybe future diesel’s will perform worse.

No they are not. Germany is different. When there is massive unemployment in Germany, Europe burns. Read any history book you like.

“The amazing thing to me is how long these corporations got away with this.”

About as amazing as the news that US money center banks have meetings with the Fed to decide what debt maturities to issue and at what levels (TBAC doesn’t just advise).

The meetings likely took place in a German government buildings at least a couple times a year. German regulators were present, labor unions too.

Merkel might try to throw the German car companies to the wolves — much like she ignores illegal immigrants raping native Germans — but the EU needs German industry to survive. Regardless of the facts or the law, this isn’t a war the EU can win.

If the German car companies colluded about anything without German government knowledge, it was how much they plan to downsize within the EU. Collusion on engine technology was encouraged, never mind sanctioned, by Berlin. Its been that way for several centuries — again, read a history book.

European leaders get together, supposedly to accomplish something good. Some megalomaniacs within the group get crazy from the power, and declare themselves (and eventually himself) as ruler of all of Europe… England gets freaked out and pulls away from the chaos, and a few years after that Europe goes to war. Rinse and repeat, over and over and over again.

Russia is sometimes involved in the centralized power grab, sometimes not — but because of geography it gets pulled in to the war either way.

I suspect the Russians are quite happy with Gazprom effectively controlling Europe’s energy supply. It is Brussels — the unelected megalomaniacs — that wants war

the unelected crazies running the EU want to make sure Germany obeys them, however unwilling. nationalism on the rise in every EU member state. Europe’s fiscal situation is a disaster. England is trying to pull itself away from the continent…

Its the start of every historic novel that ends with Europe going to war. In this case, history isn’t just rhyming, its repeating almost exactly

I am not sure what great harm was done here. Are Germans cars now inferior as a result of this? The marketplace will sort this out while the governments will try to extort money from them over this. I don’t own German vehicles as I like to buy American but this means nothing to me.

It’s deeper.
German authorities passed the vehicles, they were caught out.
Who received a bung to get these past tests?

Now, EU pushed other countries in the EU by saying the last emissions scandal was because the individual countries should have tested. Think – German problem is made into everyone else’s failure. German failure to test properly isn’t because of some collusion in Germany.

Is that right? Who is in bed with whom?

I’m glad the USA caught the first scandal as well as FIFA – another one everyone in Europe knew was a problem but no one did anything about. Yes – FIFA is in Switzerland not the EU but the same sort of actions when you look at some of the top brass.

The writer or interpreter of dear spiegal is obviously westernized exagerationalist or anti German. From my own 32 years of selling German equipment for the construction industry I found the Germans as well as the Swedish and Japanese manufactures very in tune to the well fare of their employees and their consumers. I doubt it was a secret consortium too. In the Mid 80’s Liebherr the premier manufactures of lifting , digging and material handling equipment collaborated with Mercedes Benz to build a Construction industry Diesel engine. Hanz Liebherr known for designing the most rugged and long lasting machinery was looking for a solution for a Diesel engine that would stand up to the demands of his application needs. No one but Volvo had done anything to improve Diesel engines since their invention. Liebherr used the entirety of the Swiss Alps to design and build the new engine, utilizing the extreme and changing working conditions of ultra thin air and cold temperatures as well as volcanic abrasive rock, and steep mountainous roads to test endurance and efficiency of engine life, bearing wear, gear integrity in continuos remote operating conditions. Once the engines were ready he sent completed equipment to Australia, Russia, Afghanistan Iran and Iraq as well as Africa, Alaska and Artic Circle to punish and refine the entire design believing that testing at the factory simulated conditions and gave him control but actual working conditions of these remote conditions also provided the real life headaches of downtime and frustration of human failures added to the equation. In the factories Hanz Liebherr built all of his facilities utilizing whole communities. He helped educate his employees according to their strengths and capabilities. Some went to technical trade education some to universities. Most employees were for life. They had unions yes but unions that worked with him. Employees on the line were always trained not just on one application but rather everything in the assembly from metal to electrical to heavy assembly to fine finger work and mind expanding computer operation of machining tools. When work slowed in an area thes employers were sent elseware to receive further traning to work on other things Liebherr produced such as pump and valve manufacturing and assembly, heating cooling components as well as air conditioning components, electrical panel wiring, when Hanz Liebherr couldn’t find a reliable supplier he found a way to make it with his own people. That’s the way it was he had good people and kept them working. He collaborated with others like Siemens who also operated the same way. Together and with others of like mind they found work for their employees under utilized workers rather than shit canning them like American manufactures do. They kept retraining both in the classroom and on the job be it for their own company growth. Liebherr built the first Tower Crane and from there the first hydraulic mining shovel and wheel loader and then dozers, heavy lift friction cranes then hydraulic cranes, He then built his own gear turning equipment, machining and tooling equipment whenever a supplier could not be found to meet his toughest tollerances required. He expanded into his own construction group to build his factories and hotel for students of his company, utilizing once again workers he had trained out of high school or college. Hanz Liebherr built Caterpillars first excavator, the Cat 215. I saw the drawings first hand myself. Caterpillar asked him to put their name on it. He turned them down, as they would not allow him to manufacture it either. They had other plans. Eventually some type of agreement was made but the excavator was built by Mitsubishi as Catepillar needed to manufacture equipment with a Japanese manufacture to have access to selling equipment in Japan. that’s how the Japanese restrict manufactures from coming into Japan rather than tariffs. You must partner with a Japanese manufacture if you want to sell anything there. It makes both consumption and manufacturing sustainable.
Liebherr partners with Siemens on the famed AirBus, supplying landing gear componets and assemblies, as well as air filtration and air conditioning systems developed for the Seimens high speed train, and Bombardier and Boeing jets, That’s how the world works and how a design build consortium flourishes were low bid fails the consumer on everything from Military to roads and bridges and development of sustainable buildings and communities. Utilize your available resources rather than disguard and waste. I’m sure the writer for der spiegal didn’t understand any of that. And if I was to guess I’m sure the dirtball from Volkswagen, Daimler etc etc group was American
( probably Harvard) business educated who have done more to destroy America than any terrorist alive today. No German manufacture I’ve ever had experiience working with would ever not be thinking about his and his family’s reputation and his employees livelihood. They just don’t operate that way.
One other thing Hanz Liebherr did not believe in owing anyone money. He utilized banks to sustain short term payments through construction of his manufacturing plants and manufacturing development projects. When a project was conceived the funds appropriated ( including 52% for research and development) funds were then allotted from savings, which were always in Gold. When the plant was built in the United States the gold was exchanged into Dollars ( $ 53 million USD) and the bank payed off lump sum in total. The day the keys were handed to Hanz Liebherr. I asked why once, he turned and smiled at me with the kindest smile, all of he while puffing on his huuuuuuge Cuban Cigar, “Tim, if I don’t owe anybody, they can’t take it away. “

The things described… I don’t understand what the problem is. It sounds like a standards organization: you set the maximum speed and minimum speed for working the sunroof, based on design considerations, and argue it out, but in the end you pick *something*, so that parts and designs are interchangeable, making the overall cost for everyone cheaper.

Correct me if I’m wrong, but didn’t Compaq and some other companies set standards for connectors in the same way? Wasn’t the USB designed like that? Aren’t the outlets in your home like that?

Your house … was it built according to the International Building Code?

European politics strongly favoured Diesel over Gasoline through tax incentives. Better for the environment, less oil required, biodiesel, etc.
Anybody see politics screwing up technology once again? Green this and that, subsidise Tesla buyers, windmills, etc.
Forgive them, they don’t know what they are doing, OR
The road to hell is paved with good intentions.

it may just be that all auto technology is obsolete, whether its diesel, electric or W Bushs biofuel made from switchgrass. the personal car is obsolete, if a teenager cant text and drive they wont drive. bad times for big brother, without a drivers license or an SSN card, (you never had a job) they won’t be able to keep tabs on you. too bad

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